Did Einhorn Realize Apple’s Troubles before Buffett?



Berkshire sells 1.1% of AAPL holdings

In the previous article, we looked at the change in Warren Buffett–owned Berkshire Hathaway’s (BRK.A) position in tech giant Apple (AAPL).

In the fourth quarter of 2018, Berkshire sold ~1.1% of its total Apple shares. With this, at the end of the fourth quarter, the investment company owned ~249.59 million shares of the iPhone maker.

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David Einhorn’s exit from Apple

Greenlight Capital, which is owned by popular hedge fund manager David Einhorn, sold all its long positions in Apple on August 31, 2018, at $228 per share. At this time, Apple was trading on a bullish note, and in the coming months, the stock fell sharply after posting its 2018 high of ~$233.47. In August 2018, Apple posted a high of $228.87, close to Einhorn’s exit price.

While the average selling price for Berkshire Hathaway’s Apple position in the fourth quarter of 2018 is unknown, it can’t be better than Greenlight Capital’s.

Einhorn’s decision to exit his Apple position back in the third quarter of 2018 seemed like it was made in a hurry following reports of AAPL’s increasing challenges in China. However, the sharp fall in Apple stock after Einhorn’s exit proved his timing to be nearly perfect and could indicate that he realized the intensity of Apple’s China problems much earlier than Buffett.

As of February 15, Apple stock has risen 8.0% YTD (year-to-date) compared to the 10.7% and 12.6% YTD rises in the S&P 500 Index (SPY) (VTI) and the NASDAQ Composite Index (QQQ), respectively.

In the next article, we’ll discuss a key area where Buffett might have gone wrong on Apple.


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